Alex Mittal – Early Stage Investing

**Patrick O'Shaughnessy** (0:04)
Hello and welcome, everyone. I'm Patrick O'Shaughnessy, and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfieldguide.com.

**SPEAKER_1** (0:24)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (0:49)
My guest this week is Alex Mittal, co-founder of the Founders Club. Following past guest Jeremiah Lowin, Alex is my second elementary school friend to appear on the podcast, a trend I hope continues.
Funders Club is a unique venture firm because it builds around a network of investors and entrepreneurs who submit deals for consideration and invest together.
But as you'll hear, Alex and his co-founder Boris aren't just building an open platform for early stage investing. They also then take a very traditional venture approach, making investment decisions themselves when it comes to building a centralized portfolio. Our conversation is about what Alex has learned investing in almost 300 early stage companies over the past seven years. Please enjoy. So Alex, you're the second in, we could call this like a sub-series of the podcast, which is like my childhood friends that get to appear on the podcast after Jeremiah.

**Alex Mittal** (1:36)
It's an honor.

**Patrick O'Shaughnessy** (1:37)
It would be fun to begin since probably a lot of people won't be familiar with Founders Club, with the idea itself and maybe the kind of origin story around the inception of the idea and then there's a million little categories that we're going to go into.

**Alex Mittal** (1:50)
There's kind of two sides to the story of the origins of Founders Club. So, one is the personal one of Boris Silver, who's my co-founder and investment partner in my own individual entrepreneur story as well and the other is the story of venture capital. So, in the quickest nutshell that I could possibly do on both, one is Boris and I, previous to FC, were entrepreneurs and I still think of us in the present tense as entrepreneurs of course as well, but had started our own technology companies and from the lens of a founder thought that there could be potentially a different and we hoped better approach to venture capital and that's sort of where it started from and then as far as the lens of just VC as a discipline and a field, if you look across the history of venture, it's maybe a generation old, 80 something years old and especially at the time in 2011-12 timeframe when Boris and I got together and started thinking about, okay, what would a VC firm that fully embraced today's technology and landscape, what would that look like? What we came away from was recognizing there's a lot to learn from the past successful VC firms. In fact, they wouldn't still be here and have written the ups and downs of multiple economic cycles if they weren't doing something right.
On the other hand, somewhat shockingly, the people providing capital to the innovators that disrupted other industries, like Amazon disrupted e-commerce, et cetera, they themselves hadn't necessarily fully embraced software and technology at that time. What's really cool is, over the last five years, you're starting to see pretty much every venture firm incorporate software or data, et cetera, in some format or the other. But that was our origin. And really, it was just, what would a VC firm look like if it was almost more of a community and co-op powered model where you leveraged a community of thousands of people around the world for deal flow, for sourcing, for vetting, on the tail in the value add piece.
And still had, though, the discipline of a traditional venture firm where returns matter and due diligence matters. And that was the spark, and that was six and a half years ago.

**Patrick O'Shaughnessy** (3:58)
Can you describe the basic setup? So I'll try to use a spectrum, and then you can say where on the spectrum you might be. So one would be just a small partnership. They do everything themselves. There's no network involved. Another end of the spectrum might be something like AngelList, where you can sort of open up and crowdfund or something like this.
My sense is that you're somewhere in between those two. So maybe describe literally how this process works.